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European gas

NBP and TTF gas prices edged higher last week as lower LNG sendout and Norwegian supply—compared to late August—aligned with strong injections into storage to further narrow the y/y storage gap.

The market looks set to stay in a reasonably tight range as planned late-summer maintenance curbs Norwegian production, and storage capacity holders will continue to try to close the y/y storage gap before winter. Planned maintenance is expected to cut Norwegian output and processing capacity by about 39 mcm/d through to 25 September. This is less than the 58 mcm/d that was constrained last week, so it does allow Norwegian flows some ability to ramp up in w/w terms. Russian supply is still considerably higher y/y given high exports through Germany, but the y/y increase has shrunk over the last few weeks.

At the same time, LNG sendout in Northwest Europe has begun to fall owing to fewer port receipts. Daily sendout into the UK, Netherlands, Belgium and France was as high as 88 mcm/d in August, but this dipped as low as 35 mcm/d last week as only one cargo arrived, into France. Northwest European receipts are scheduled to climb in the next two weeks, but sendout may remain slow while stocks are replenished.

Given the tightening market balance, gas prices are starting to look to ration how much gas is going to power. On Monday morning, TTF spot prices were trading around 17.23 €/MWh, which is now above the fuel switch trigger of 17.12 €/MWh to which prices had previously traded just below. With TTF prices above the trigger, prices could continue to hover around this level provided injections into storage stay strong.

In the week to 9 September, Europe injected 2.39 bcm of gas into storage, less than the 2.8 bcm injected the week before but 0.8 bcm more than the 1.6 bcm injected the same time last year. Injections have slowed this month so far compared to August, due to a tightening of supply and the narrowing of the y/y storage gap, which was down to being 6.6 bcm as of 9 September.

Energy Aspects forecasts that Europe will inject a total of 1.46 bcm into stocks in NW Europe (the UK, Netherlands, Belgium, France, and Germany) in the week starting 12 September and 1.1 bcm in the week beginning 19 September, for a total of 2.56 bcm over the two-week period. Last year, Europe injected 1.23 bcm into NW European stocks over the 12-24 September period. Our forecast today includes the announcement that GRTgaz had been ordered by the French government to inject some 95 mcm into storage facilities in southeastern France by the end of winter.